Singapore is leading the way for the digital economy: Study

Singapore is the country seen as benefiting the most from the investments it has made into technological innovations, according to a report by the World Economic Forum (WEF) on Wednesday.

The country topped the WEF's "networked readiness" index for the second year in a row. The index analyses how prepared countries are to benefit from emerging technologies and opportunities created by digital innovation, which the WEF calls the fourth industrial revolution.

Other top countries listed in the Global Information Technology Report 2016 included Finland, Sweden and Norway. The U.S. is placed fifth in the rankings.

Network readiness is important because it allows for new forms of innovation, according to the report. For instance, the digitization of products or "uberization" of services are examples of tech-based innovations.

Margareta Drzeniek, lead economist at the World Economic Forum, explained why Singapore was able to top the rankings.

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School children walk in line past the financial district during an outdoor excursion at the Marina Bay in Singapore on May 24, 2010.

"You can be small and be open by connecting to the world and making (digital investment) a priority for the country," she told CNBC Wednesday.

"This is what Singapore has done," she added. "Singapore has put into place a very strong government strategy to promote information and communications technology in terms of skills, infrastructure, business usage and individual usage. This coherent approach to really pushing it forward was what made it a success."

The report, published this week, aims to encourage investment information and communications technology by highlighting the economic and social impacts of digital innovation.

"The digital economy is an essential part of the architecture of the fourth industrial revolution," Richard Samans, head of the center for the global agenda at the World Economic Forum, said in a press release.

"In order for digital technology to continue contributing economic and social impact, societies need to anticipate its effects on markets and to ensure a fair deal for workers in digitized market environments."